Africa/Global: Falling Short on Climate Finance

Editor's Note

Africa, the continent with warming deviating most rapidly from
"normal" conditions, could see climate change adaptation costs rise
to US$50 billion per year by 2050, even assuming international
efforts keep global warming below 2 degrees C this century,
according to a new United Nations Environment Programme (UNEP)
report.

This AfricaFocus Bulletin contains the press release and excerpts
from the Executive Summary of the new UNEP report Africa's
Adaptation Gap 2: Bridging the Gap - mobilizing sources.

The report contains updated data on the expected cost of adapting to
climate change under different scenarios for global warming, for the
time horizons of 2020, 2050, and 2100. Key messages include the fact
that Africa is already the continent where climate is already
deviating from normal more rapidly than any other continent.

Projections for impact rise enormously even if global warming is
held to less than 2 degrees C, and even more so if efforts to slow
global warming are insufficient to make that goal. This means that
the most important action to be taken is to limit the damage by
"deep global emission reductions." Even if this is done, the costs
of adaptation will rise rapidly, requiring action to find new
sources of funding at national, continental, and global levels.

The report suggests a continent-wide levy (transaction tax) on four
sectors: extractive industries, financial and banking transactions,
international trade, and tourism. It also highlights the imperative
for national tax systems to be made more effective, including
minimizing reductions in the tax base from illicit financial flows.

For additional background on the current gap in international
climate finance, see the Feb. 26 article by Brookings Instution
analysts Martin Stadelmann and Timmons Roberts. They note that the
UN has issued a "clarification note" admitting that their estimate
of current levels of annual total North-South climate financing of
$40-175 billion is almost certainly closer to the lower than the
upper end of that range. See http://tinyurl.com/m9zo2pz

Of related interest:
March 9 Guardian article by Bill McKibben
http://tinyurl.com/p2qg3we
"Pressure is growing. A relentless climate movement is starting to
win big, unprecedented victories around the world, victories which
are quickly reshaping the consensus view."

Climate adaptation costs for Africa could soar to reach US $50
billion annually by mid-century.

Cairo, 4 March 2015 - Africa, the continent with warming deviating
most rapidly from "normal" conditions, could see climate change
adaptation costs rise to US$50 billion per year by 2050, even
assuming international efforts keep global warming below 2 degrees C
this century, according to a new United Nations Environment
Programme (UNEP) report.

Released at the 15th African Ministerial Conference on the
Environment (AMCEN), Africa's Adaptation Gap builds on UNEP's
Emissions Gap Report 2014, which showed that the world is not
currently headed in the right direction for holding global warming
below 2 degrees C. This latest Africa Adaptation Gap report also
builds on UNEP's Global Adaptation Gap Report 2014, which found that
adaptation costs in all developing countries together could climb as
high as US$250-500 billion per year by 2050.

Produced in collaboration with Climate Analytics and the African
Climate Finance Hub, the report says deep global emissions
reductions are the best way to head off Africa's crippling
adaptation costs. It also finds that the continent's domestic
resources are insufficient to respond to projected impacts, but
would be important to complement international funding for African
countries - including meeting the Cancun climate finance commitments
by 2020.

"The accelerating rate of climate change poses great adaptation
challenges, of which we have been well forewarned," said UN UnderSecretary
-General and UNEP Executive Director Achim Steiner. "The
best insurance against the many potential negative impacts of
climate change is ambitious global mitigation action in the longrun,
combined with large-scale and rapidly increasing funding for
adaptation. Investing in resilience and adaptation as an integral
part of national development planning can develop resilience to
future climate change impacts."

Africa's looming climate crisis

Africa is the continent where a rapidly changing climate is expected
to deviate earlier than across any other continent from "normal"
changes, making adaptation a matter of urgency, the report says.

Warming projections under medium scenarios indicate that extensive
areas of Africa will exceed 2 degrees C by the last two decades of
this century relative to the late 20th century mean annual
temperature. Under a high warming pathway, temperatures could exceed
2 degrees C by mid-century across much of Africa and reach between 3
degrees C and 6 degrees C by the end of the century. This would have
a severe impact on agricultural production, food security, human
health and water availability.

In a 4 degrees C world, projections for Africa suggest sea levels
could rise faster than the global average and reach 80cm above
current levels by 2100 along the Indian and Atlantic Ocean
coastlines, with particularly high numbers of people at risk to
flooding in the coastal cities of Mozambique, Tanzania, Cameroon,
Egypt, Senegal and Morocco.

"This is not just a question of money; millions of people and their
livelihoods are at stake," said Binilith Mahenge, President of AMCEN
and Tanzania's Minister of State for Environment. "Africa's
population will be at an increasing risk of undernourishment due to
increasing food demand and the detrimental effects of climate change
on agriculture on the continent. Global warming of 2 degrees C would
put over 50 per cent of the African continent's population at risk
of undernourishment. Yet, the IPCC showed that without additional
mitigation we are heading to 4 degrees C of warming."

"Rising to the challenge and addressing the systemic harm that
climate change may cause in Africa, thus undermining the post-2015
sustainable development agenda, warrants leaving no stone unturned
in exploring opportunities for supporting adaptation actions and
measures in Africa," he added.

Closing the funding gap

The report explores the extent to which African nations can
contribute to closing the adaptation gap - especially in the area of
identifying the resources that will be needed.

The evidence suggests that African countries - such as Ghana,
Ethiopia and South Africa - are already committing some resources of
their own to adaptation efforts. Country-case studies in the report
suggest that by 2029/2030, under moderately optimistic growth
scenarios, Ghana could for example - based on hypothetical scenarios
- commit US$233 million to adaptation financing, Ethiopia US$248
million, South Africa US$961 million and Togo US$18.2 million.
However, international funding will be required to bridge the
growing adaptation gap even if African nations commit to ways to
increase domestic sources. Current levels of international finance,
through bilateral and multilateral sources, are not sufficient.

"Because of the magnitude of the challenge, further examination of
the potential and the feasibility of mobilizing untapped
international, regional and domestic sources should be explored
further," said Mr Steiner.

Scaling up international climate finance under the UN Framework
Convention on Climate Change (UNFCCC) may lead to sufficient funding
for adaptation, but even in that case, implementation can only reach
its full potential if complemented by comprehensive and effective
national and regional policy planning, capacity-building and
governance.

The promotion of an effective enabling framework for private sector
participation in adaptation activities would also be a key
contributor to closing the funding gap, the report finds.

Africa's Adaptation Gap 2

Technical Report: Bridging the Gap - Mobilising Sources

Executive Summary

Climate change represents a clear and present danger to the
development prospects of Africa. African countries are going to have
to adapt to protect their peoples from the harsh impacts of climate
change and to ensure that they are not derailed from their current
development pathways.

Developed country Parties to the Climate Convention committed to
"assist the developing country Parties that are particularly
vulnerable to the adverse effects of climate change in meeting costs
of adaptation to those adverse effects." (UNFCCC Articles 4.3 and
4.4)

The first edition of Africa's Adaptation Gap Technical report
(AAGr1) in 2013 provided an overview of the most relevant impacts of
climate change in different sectors across Africa, as well as cost
estimates for adaptation.

This report (2015 AAGr2) is directed towards exploring the extent to
which African countries can contribute to closing the adaptation
gap, in order to better understand the gap in the resources that
will be needed and, thereby, the likely extent to which
international climate finance must be urgently raised, leveraged and
deployed in service of Africa's pressing adaptation needs.

Given the increasing severity of the adaptation challenge posed by
climate change to Africa, no stone should be left unturned in
looking for solutions for closing the adaptation gap, for two major
reasons: firstly, the case for international solutions is even
stronger if national and regional options are considered and
evaluated; secondly, it is in the interest of African nations and
their stakeholders at all levels to hedge against the possibility
that the funding provided through the Green Climate Fund and other
channels is insufficient or ineffective.

Building on the report's findings, and relating to the current
negotiations towards the post-2015 agreement context under the
UNFCCC, African policymakers may consider the three following
findings:

The best insurance against potentially catastrophic impacts of
climate change and unmanageable adaptation and (residual) damage
costs in Africa is effective and ambitious mitigation action that
leads to deep global emission reductions;

Cancun climate finance commitments need to be met by 2020, the
historical imbalance between adaptation and mitigation in the
allocation of resources needs to be corrected, and ease of access
('modalities') for African countries needs to be improved. Adequate
(large-scale, rapidly increasing) and predictable funding must be
mobilised for the subsequent periods;

The potential for - and the feasibility of - mobilising untapped
international, regional and domestic sources should be explored
further.

An update on climate impacts shows increased urgency

Africa is beginning to experience annual-mean temperatures higher
than any locally experienced in history. This is already happening
in Central Africa and is projected to cover the entire continent in
the next two to three decades; earlier across Africa than any other
continent.

Warming projections under medium scenarios indicate that, by the
last two decades of this century, extensive areas of Africa will
exceed 2 degrees C relative to the late 20th century mean annual
temperature. Under a high warming pathway ("over 4 degrees C
world"), that exceedance could occur by mid-century across much of
Africa and reach between 3 degrees C and 6 degrees C by the end of
the century.

Combined with changes in water availability, for example, this
will likely have a severe impact on agriculture. 97% of sub- Saharan
agricultural systems are rain-fed, and 60% of the labour force
relies on agriculture.

Sea level rise is generally higher along Africa's coastlines than
the global average, particularly along the Indian and Atlantic
Oceans. Sea levels are projected to rise at least 40cm above 2000 by
2100 in a below-2 degrees C scenario (close to 1.5 degrees C), and
to 80cm in an over 4-degrees C scenario (compared to roughly 70cm
globally). There are chances it could be much worse, with a 15%
chance of 100cm sea-level rise above 2000 by 2100 and a considerable
5% chance of a rise exceeding 130 cm by 2100.

Particularly high numbers of people are at risk of flooding in
the coastal cities of Mozambique, Tanzania, Cameroon, Egypt, Senegal
and Morocco.

Estimated adaptation costs point to a very rapid divergence between
globally low and high warming scenarios

This second report estimates that adaptation costs could rise to
about USD50bn/year 2 by 2050 for a scenario holding warming below 2
degrees C.

The estimated costs double to about USD100bn/year by 2050 for a
scenario reaching over 4 degrees C by 2100.

In the longer term, and relative to Africa's (growing) GDP,
adaptation costs could rise to as much as 6% of African GDP by 2100
in an over 4 °C world, but in a below 2 °C world, these would be
less than 1% of GDP.

Adaptation cannot prevent all damages: residual damages will always
remain and are large

In a more general sense, the IPCC's recent Fifth Assessment
Report (AR5) noted that even after implementation of potential
adaptation options, residual risks remain for many sectors in
Africa.

This, second Africa Adaptation Gap report confirms this in a more
specific sense: even if all cost-effective adaptation is realised,
Africa will still suffer large "residual" damages, which are
estimated to be double the adaptation costs in the period 2030-2050.

Africa and the international community will need to find ways to
cope with these residual damages, under any scenario of global
mitigation and local adaptation efforts. Current international
funding falls short and must be scaled up rapidly

The climate change challenge exceeds the capacity of the African
continent to respond to projected damages and impacts through
domestic resources, even if the base to raise additional funding is
broadened. Scaled-up international support for African countries is
therefore critical.

Current levels of international funding are not sufficient. So
far, while difficult to estimate, roughly USD$1-2bn a year is
flowing to Africa for adaptation, through a variety of sources.

A steep increase in adaptation funding from developed to
developing countries would contribute significantly to closing the
adaptation-funding gap. Therefore, increased adaptation funding
disbursements  in line with the USD100-billion target as agreed by
the Parties at the UNFCCC conferences in Copenhagen in 2009 and
Cancun in 2010 - could result in bridging the deepening adaptation
gap by 2020.

Such disbursements subsequently need to continue to grow rapidly
to keep pace with warming, and most rapidly if global mitigation
fails to put the world on a pathway to hold warming below 1.5 and 2
degrees C by 2100.

Recent positive developments in the operationalisation of the
Green Climate Fund are of critical importance for adaptation
financing in Africa. The GCF initial capitalisation was completed in
December 2014, with pledges amounting to around USD10.2bn. The GCF
Board has decided that 50% of its portfolio should be allocated to
adaptation and, in turn, that 50% should go to particularly
vulnerable developing countries including Least Developed Countries
(LDCs), Small Island Developing States (SIDS) and Africa.

The report's approach: African case studies on adaptation

This report has taken the approach of exploring the additional
options and opportunities that may exist in Africa through four
country case studies  representing a reasonably diverse sample of
the great variety of countries and economies to be found within
Africa (Ethiopia, Ghana, South Africa and Togo).

Each of these case studies explores aspects of the adaptation
response and, in particular, the scope for domestic adaptation
financing, in terms of the increased domestic adaptation resources
that could be generated through economic growth and tax reform,
through adaptation-specific taxes and fees, and through regulation
and market-making aimed at eliciting greater private investment.

The conceptually-simple calculations this report presents are
primarily intended to be illustrative of the limits and potential
for adaptation financing from domestic sources in a context where
strong growth is assumed and tax reforms are successfully achieved.

The evidence suggests that African countries are already
committing some resources of their own to adaptation efforts and
that there are opportunities for doing more that can be considered
and debated across the continent, with lessons to learn and share.

As the report shows, there are a lot of adaptation options, measures
and sources that countries can mobilise and implement from the
national level to the international level to limit the deepening of
the adaptation gap under any level of global mitigation. The report
assesses:

Options at the international level  scaling up countries'
commitments and channelling through the Green Climate Fund and other
channels

Options at the national level  resources from national budget

Options at the continental level  levies

...

To address the multiple challenges of adaptation in Africa, there
will be no single solution that solves all the funding and
implementation issues African countries face. Addressing these
challenges will require the deployment of measures at the
international, continental and national levels.

A levy on transactions to pay for adaptation?

This report assesses, amongst other complementary options, the
potential effects of a levy applied on transactions.

Building upon similar international experiences in both developed
and developing countries, and political as well as economic
analyses, a levy on transactions in Africa is explored in four
sectors: extractive industries, financial and banking transactions
(including remittances), international trade and transportation
(including exports) and tourism. The estimated revenue shows that
even if such regional revenues were generated by the application of
these levies, however, adaptation costs would exceed the
revenue generation capacity as early as 2020.

Current and projected adaptation costs for Africa far exceed average
climate finance over the 2010-2012 period. Addressing this urgent
lack of funding will require the deployment of complementary
measures at the international, continental and national levels. Even
if for example a levy were regionally applied on transactions to
raise revenue for adaptation costs which would already exceed the
revenue generation capacity by 2020. Only a steep increase in
adaptation funding from developed to developing countries will
contribute to closing the adaptation-funding gap in Africa.

...

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